As a result, the bank is sticking to its forecast that the RBA will continue to adopt a more dovish stance.

“We remain of the view that the Bank is unlikely to raise rates any time soon, and indeed is likely to ponder cutting rates in the year ahead.”

In a research note called “worrying signs for the consumer”, the analysts drew a strong correlation between retail sales and house price growth across the states:

The argument could be made that the wealth effect from housing has been a key supporting factor for domestic consumption, given that recent house price appreciation has easily outpaced wage growth over the same time period.

“To be sure, the CSI has been pointing to weak spending growth for quite a while – but spending growth has been remarkably resilient despite this signal,” Credit Suisse said.

However, rather than conclude the CSI model is broken, the bank’s analysts argue that spending is being upheld by a delayed response in house price falls, despite a recent decline in the consumer sentiment towards property.

And the main reason for that delay? The impact of foreign buyers in the Australian housing market.

The research also suggested that the Chinese government crackdown on capital outflows has had a minimal impact on foreign buying activity in Australian property.

“It is the strength of foreign buying which has kept housing demand and prices from falling, forestalling the negative wealth and credit effects that we have seen in previous cycles,” Credit Suisse said.

In view of the headwinds to household cashflow due to low wage growth, and a potential slowdown in house price growth, the bank’s analysts remain pessimistic about consumption drivers in the near-term.

This chart shows the recent divergence between domestic consumption and the CSI model, plotted one year in advance:

“There is clear evidence that weakness in the housing sector, stagnant real wages and high debt levels are weighing on consumer spending and pricing power,” Credit Suisse said.

The bank retains its view that further rate cuts may be in store, and speculated that such a scenario is being “more seriously considered” by RBA officials.

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.